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Thomson Reuters report: Financial institutions recognize benefits of adopting a more strategic approach to regulatory data management & compliance

First Published 19th October 2016

29% of Asia-based respondents are taking a strategic approach to regulatory data management, compared with 18% percent in Europe and just 13% percent in North America.

A Thomson Reuters report reveals that 88 percent of financial institutions will work strategically across regulatory agencies over the next two years. Financial institutions are recognizing the benefits of harmonized approaches to data management, enabling them to leverage data commonalities that exist across multiple global regulations.

The major benefit identified by 79 percent of respondents was consistency of data across the business, followed by organizational efficiencies (63 percent), cost savings (50 percent) and a reduction in data sources used (44 percent).

These findings underscore a shift in the mindset of leading financial institutions with respect to regulatory data management. The report, titled "How Financial Institutions are Leveraging the Data Commonalities Across Regulations: The Case for a Harmonized Approach to Regulatory Compliance," looks at the changing regulatory data management approaches of leading investment banks, asset managers, asset servicers and insurers. It provides step-by-step guidance for compliance, across the board and the globe, for the range of regulations aimed at reducing systemic risk that impact their businesses, including MiFID; AIFMD; Basel III; Dodd-Frank; EMIR; FATCA; IFRS; Russian Sanctions; Shareholding Disclosures; Solvency II; and more.

According to the report, asset managers are currently the frontrunners in terms of progress. They lead the pack as the type of institutions most likely to have a strategic regulatory data management approach in place. Banks, insurers and asset servicers are beginning to change their mindsets, operating with a strategic approach to some, but not all, regulations. Geographically, financial institutions in Asia-Pacific are more likely than their European and North American counterparts to have consolidated regulatory data management models in operation.

The report shows that change is on the horizon. With many regulations requiring similar or complementary data sets, organizations are re-evaluating existing regulatory information and workflow arrangements with a view to consolidating current content and developing a more harmonized approach.

Report highlights:

  • 95 percent of financial institutions participating in the underlying survey agree that there are significant benefits to be gained from a harmonized approach to data management for multiple regulations.
  • 29 percent of Asia based respondents stated they are taking a strategic approach to regulatory data management, compared with 18 percent in Europe (inc. UKI) and just 13 percent in North America.
  • The biggest benefit was seen as consistency of data across the business (79 percent of those surveyed), followed by organizational efficiencies (63 percent), cost savings (50 percent) and reduction in data sources (44 percent).
  • The data types seen as offering the biggest return on effort, based on their level of commonality across regulations, were identifiers (such as the Legal Entity Identifier) and classifiers, followed by credit ratings and pricing data.
  • Despite the benefits, the gap between the ideal and reality is wide. Only 12 percent of respondents currently have a fully strategic approach to leveraging regulatory commonalities.
  • The biggest barriers to progress are organizational and cultural - the scale and complexity of firms makes it difficult to adapt to new regulatory data management models. Cost and a lack of data definition and consistency also hamper efforts to move towards more harmonized approaches.
  • Nonetheless, a clear shift is underway. Efforts to work strategically across regulations will increase at 88 percent of financial institutions over the next two years.

The report is available for free upon completion of the new Thomson Reuters Multi-Regulatory Data Commonalities Diagnostic Tool.

Click here to complete it and get a copy of the report.